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Do parking fees affect retail sales? Evidence from Starbucks

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  • Hymel, Kent

Abstract

Parking meters are a common feature of urban areas, yet their economic impacts are not well understood. Local governments use meters to raise revenue and to ration scarce parking spaces. On-street parking, however, is seldom priced at the market rate. When inefficiently priced, parking meters may negatively affect the businesses and individuals they are intended to serve. This paper uses a quasi-experimental research design and an observational data set to assess metered parking policy. Sharp twice-daily changes in parking meter enforcement provide a comparison of customer traffic to a popular retail area in free and metered parking environments. Regression discontinuity results suggest that when there is an excess supply of parking (i.e., many spaces are vacant), a small 50 cent per-hour parking fee deters commerce. At two separate Starbucks establishments, the meter fee reduced customer traffic by almost 30%. However, when there is excess demand for parking (i.e., all spaces are constantly occupied), there is no evidence that meters help to increase customer traffic. These results suggest that sub-optimal meter pricing can impose substantial costs on nearby businesses.

Suggested Citation

  • Hymel, Kent, 2014. "Do parking fees affect retail sales? Evidence from Starbucks," Economics of Transportation, Elsevier, vol. 3(3), pages 221-233.
    • Handle: RePEc:eee:ecotra:v:3:y:2014:i:3:p:221-233
    DOI: 10.1016/j.ecotra.2014.08.001
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    2. Krishnamurthy, Chandra Kiran B. & Ngo, Nicole S., 2020. "The effects of smart-parking on transit and traffic: Evidence from SFpark," Journal of Environmental Economics and Management, Elsevier, vol. 99(C).
    3. DE BORGER, Bruno & RUSSO, Antonio, 2015. "Lobbying and the political economy of pricing car access to downtown commercial districts," Working Papers 2015012, University of Antwerp, Faculty of Business and Economics.
    4. Reigadinha, Tânia & Godinho, Pedro & Dias, Joana, 2017. "Portuguese food retailers – Exploring three classic theories of retail location," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 102-116.
    5. Kerstin Westin & Annika Nordlund & Johan Jansson & Jonas Nilsson, 2020. "Goal Framing as a Tool for Changing People’s Car Travel Behavior in Sweden," Sustainability, MDPI, vol. 12(9), pages 1-18, May.
    6. Florian Straub & Otto Maier & Dietmar Göhlich, 2021. "Car-Access Attractiveness of Urban Districts Regarding Shopping and Working Trips for Usage in E-Mobility Traffic Simulations," Sustainability, MDPI, vol. 13(20), pages 1-29, October.
    7. Olus Inan, Murat & Inci, Eren & Robin Lindsey, C., 2019. "Spillover parking," Transportation Research Part B: Methodological, Elsevier, vol. 125(C), pages 197-228.

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